Call for Government to Recuscitate Exploration
PROFESSIONAL GEOSCIENTISTS CALL ON GOVERNMENT TO RESUSCITATE AUSTRALIAN MINERAL EXPLORATION
Australia's reputation as one of the world's foremost destinations for mineral exploration is under threat from a critical market failure that discourages ‘greenfields' exploration, according to Australia's leading professional institute for geoscientists.
Additionally the organisation says, Australia's current precious and base metals mining production is increasingly reliant on a small number of major deposits which are largely ‘mature' and in decline - presenting a clear threat to mine production and in turn, the export earnings of the Australian economy.
The concerns are expressed in a major report released today by the Australian Institute of Geoscientists (AIG) and titled - "Market Failure in the Australian Mineral Exploration Industry: The Case for Fiscal Incentives". The report was authored by exploration geologists Mr Chris Cairns (Integra Mining Limited) and Dr Jon Hronsky (Western Mining Services) and by mineral economist Mr Richard Schodde (MinEx Consulting).
The report finds that the heavy reliance of companies exploring in Australia on short-term market capital has impeded their ability to undertake high risk but potentially high reward "greenfields" or "grassroots" exploration capable of yielding the new major discoveries needed to sustain Australia's precious and base metals mining production.
"Additionally, Australia's current tax regime offers no incentives, concessions or support for investments in greenfields exploration by companies that do not already have producing mines generating cashflow against which exploration expenditure may be fully offset for taxation purposes," AIG Vice President, Mr Andrew Waltho, said today.
"Essential work by ‘junior' exploration companies -- which now undertake the majority of metals exploration in Australia -- receives no recognition under our current taxation system during the often protracted time it takes to discover a new deposit and turn it into a viable and sustainable mine," Mr Waltho said.
"Instead, these 'juniors' are driven by very short-term market forces and by the need to constantly report good news and stay on brokers' and investors' radars. This approach does not encourage longer-term investment in exploration, typically without short-term newsworthy results, that is needed to find the next generation of major discoveries.
The report prepared by Cairns, Hronsky and Schodde, supported by AIG, is available here.
27 April 2010
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